Anglogold Ashanti (AU) Showing Signs Of A Dead Cat Bounce Today

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Anglogold Ashanti ( AU) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Anglogold Ashanti as such a stock due to the following factors:

  • AU has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $31.9 million.
  • AU has traded 107,435 shares today.
  • AU is up 5.1% today.
  • AU was down 8.9% yesterday.

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More details on AU:

AngloGold Ashanti Limited operates as a gold mining and exploration company. It also produces silver, uranium oxide, and sulphuric acid as by-products. The stock currently has a dividend yield of 0.6%. Currently there are 2 analysts that rate Anglogold Ashanti a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Anglogold Ashanti has been 3.5 million shares per day over the past 30 days. Anglogold Ashanti has a market cap of $3.3 billion and is part of the basic materials sector and metals & mining industry. Shares are down 29.9% year-to-date as of the close of trading on Friday.

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TheStreet Quant Ratings rates Anglogold Ashanti as a sell. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk and poor profit margins.

Highlights from the ratings report include:
  • The debt-to-equity ratio of 1.24 is relatively high when compared with the industry average, suggesting a need for better debt level management.
  • The gross profit margin for ANGLOGOLD ASHANTI LTD is currently lower than what is desirable, coming in at 32.93%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 3.08% significantly trails the industry average.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Metals & Mining industry and the overall market on the basis of return on equity, ANGLOGOLD ASHANTI LTD underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • This stock's share value has moved by only 32.49% over the past year. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • AU, with its decline in revenue, slightly underperformed the industry average of 3.5%. Since the same quarter one year prior, revenues slightly dropped by 5.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.


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